Explanations for Zambia's economic decline

Figures & data

Table 1: Relative performance of resource rich countries

	No. of countries	GDP per capita 1970 (US$)	GDP per capita growth 1960–90 (%/year)	GDP per capita growth 1970–93 (%/year)
Resource-poor countries
Large	7	196	3,5	3,7
Small	13	343	2,5	2,1
Resource-abundant countries
Large	10	574	1,6	1,3
Small
Non-mineral	31	250	1,1	0,7
Hard mineral^a	16	304	0.8	-0,2
Oil exporter	8	831	1,7	0,8
All countries	85	362	1,6	1,1
Source: Auty, 2001: 4.
^aAuty (2001: 4) included Zambia in this category.

Table 2: The level and volatility of the copper price over time

	Copper (US$)	Standard deviation: mean	Real copper price^a	Standard deviation: mean
1960–64	24,38	24,22	100,59	23,92
1965–69	45,26	18,49	176,38	18,56
1970–74	50,45	34,64	158,12	28,28
1975–79	49,71	20,00	97,63	12,05
1980–84	57,15	19,17	74,32	26,14
1985–89	68,32	34,35	81,11	31,18
1990–94	78,48	14,14	83,69	14,55
1960–64	24,38	24,22	100,59	23,92
^aNominal copper price deflated by the US PPI (January 1960 = 100).

Figure 1. Nominal copper price (US$) Source: IFS series 11276C.DZF.

Figure 2. Nominal copper prices and GDP growth

Figure 3. Real copper price and GDP growth

Figure 4. Zambia's terms of trade and the copper price

Figure 5. Copper price volatility and Zambia's economic growth

Table 3: Volatility^a of copper and other metal prices

	Copper	Aluminium	Iron	Nickel	Tin	Zinc
1965–69	0,18	0,04	0,12	0,12	0,09	0,07
1970–74	0,35	0,13	0,18	0,12	0,39	0,73
1975–79	0,20	0,25	0,11	0,13	0,32	0,14
1980–84	0,19	0,23	0,07	0,16	0,14	0,11
1985–89	0,34	0,37	0,05	0,60	0,27	0,37
1990–94	0,14	0,17	0,10	0,21	0,09	0,20
1995–99	0,25	0,13	0,04	0,22	0,07	0,14
^aVolatility calculated as the ratio of a five-year standard deviation to the mean of the same five-year period.

Table 4: Cointegration tests for the real exchange rate and real copper price

Ho: rank = p	Trace statistic	Adjusted trace statistic	Max. eigenvalue statistic	Adjusted max. eigenvalue statistic
0	11,26	9,97	15,97	14,14
1	7,71	4,17	4,71	4,17
**Reject at the 1% level.
*Reject at the 5% level.

Figure 6. The real copper price and Zambia's real exchange rate

Figure 7. Share of total value added accounted for by manufacturing in Zambia

Figure 8. Smoothed CIM for Zambia

Figure 9. GDP p.c. growth and equilibrium p.c. growth in Zambia

Table 5: Cointegration tests for GDP p.c. growth and CIM in Zambia

Ho: rank = p	Trace statistic	Adjusted trace statistic	Max. eigenvalue statistic	Adjusted max. eigenvalue statistic
0	26,02**	22,96**	32,2**	28,41**
1	6,18	5,45	6,18	5,45
**Reject at the 1% level.
*Reject at the 5% level.

Table 6: Restriction tests on the cointegrating relationship

Significance tests^a		Weak-exogeneity tests^b		Long-term relationship
GDPdot	χ^2 = 16,53**	GDPdot	19,84**	GDPdot	1
CIM	χ^2 = 6,46*	CIM	1,28	CIM	0,83
Constant	χ^2 = 6,6*			Constant	− 0,7
**Reject at the 1% level.
*Reject at the 5% level.
^aTested with a likelihood ratio test.
^bTested with a likelihood ratio test.

Table 7: Granger causality tests

Hypothesis	Test statistic
H0: CIM does not Granger cause GDP pc growth	15,102**
H0: GDP pc growth does not Granger cause CIM	3,6
**Reject at the 1% level.
*Reject at the 5% level.

Auty , RM . 2001 . Resource abundance and economic development , London : Oxford University Press .

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